Accept or Reject? An Organizational Perspective

Umberto Garfagnini; Marco Ottaviani; Peter Norman Sørensen

doi:10.1016/j.ijindorg.2014.03.004

Accept or Reject? An Organizational Perspective

Umberto Garfagnini, Marco Ottaviani, Peter Norman Sørensen

4 Citations (Scopus)

Abstract

This paper compares the relative performance of different organizational structures for the decision of accepting or rejecting a project of uncertain quality. When the principal is uninformed and relies on the advice of an informed and biased agent, cheap-talk communication is persuasive and it is equivalent to delegation of authority, provided that the agent's bias is small. When the principal has access to additional private information, cheap-talk communication dominates both (conditional) delegation and more democratic organizational arrangements such as voting with unanimous consensus.

Original language	English
Journal	International Journal of Industrial Organization
Volume	34
Pages (from-to)	66-74
ISSN	0167-7187
DOIs	https://doi.org/10.1016/j.ijindorg.2014.03.004
Publication status	Published - May 2014

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10.1016/j.ijindorg.2014.03.004

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title = "Accept or Reject? An Organizational Perspective",

abstract = "This paper compares the relative performance of different organizational structures for the decision of accepting or rejecting a project of uncertain quality. When the principal is uninformed and relies on the advice of an informed and biased agent, cheap-talk communication is persuasive and it is equivalent to delegation of authority, provided that the agent's bias is small. When the principal has access to additional private information, cheap-talk communication dominates both (conditional) delegation and more democratic organizational arrangements such as voting with unanimous consensus.",

author = "Umberto Garfagnini and Marco Ottaviani and S{\o}rensen, {Peter Norman}",

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AU - Ottaviani, Marco

AU - Sørensen, Peter Norman

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PY - 2014/5

Y1 - 2014/5

N2 - This paper compares the relative performance of different organizational structures for the decision of accepting or rejecting a project of uncertain quality. When the principal is uninformed and relies on the advice of an informed and biased agent, cheap-talk communication is persuasive and it is equivalent to delegation of authority, provided that the agent's bias is small. When the principal has access to additional private information, cheap-talk communication dominates both (conditional) delegation and more democratic organizational arrangements such as voting with unanimous consensus.

AB - This paper compares the relative performance of different organizational structures for the decision of accepting or rejecting a project of uncertain quality. When the principal is uninformed and relies on the advice of an informed and biased agent, cheap-talk communication is persuasive and it is equivalent to delegation of authority, provided that the agent's bias is small. When the principal has access to additional private information, cheap-talk communication dominates both (conditional) delegation and more democratic organizational arrangements such as voting with unanimous consensus.

U2 - 10.1016/j.ijindorg.2014.03.004

DO - 10.1016/j.ijindorg.2014.03.004

M3 - Journal article

SN - 0167-7187

VL - 34

SP - 66

EP - 74

JO - International Journal of Industrial Organization

JF - International Journal of Industrial Organization

ER -

Accept or Reject? An Organizational Perspective

Abstract

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